“When we educate [customers], we increase their need, which helps the customer understand why they need to spend more money,” says Gorman, who launched his seminar and coaching business after 20 years as a contractor.
Greg Antonioli, president of Out of the Woods Construction in Arlington, Mass., can attest to this. He used to run around visiting houses doing free estimates, spending anywhere from 5 to 20 hours on each prospect in drive time, presentations, and estimates. For every six to eight presentations, he was signing one contract.
“About seven years ago, I realized that not only did this method not work for us, it didn’t work for the client either,” Antonioli says. “They still didn’t understand what they were paying for.” So he started to incorporate more consultative tactics, and soon saw results. Today, Antonioli’s process involves:
- Conducting the first meeting in the office. The controlled environment without the interruption of children and phones helps prospects focus, plus it indicates that they are serious about the project.
- Asking questions about prior remodeling experience. This helps uncover the prospect’s decision-making process and what has pleased or annoyed them in the past.
- Identifying primary concerns and prioritizing them. Are the prospects most concerned with budget, schedule, invasion of privacy, sound, or dirt?
- Spelling out the company’s process. Antonioli explains how his business runs and the level of project management offered. “We clarify exactly what will happen at each meeting and what decisions will be made when, so [our clients] aren’t surprised down the road.”
“This takes the mystery out of working with us,” Antonioli says. When he finally makes a visit to the house, where he talks scope and budget, the potential clients understand what’s behind the numbers.
This process has led to much greater profitability. Antonioli says he now signs construction contracts with one out of three people who sit at his desk and he has almost tripled his income. He has also cut down time spent in free estimates from 5 to 10 hours each to about 2 to 3 hours.
VALUE CONSULTATION “The objective is selling in a profitable manner. That involves demonstrating to potential clients how your business adds value to their homes,” says Mack Hanan, who coined and trademarked the term Consultative Selling and authored its bible, Consultative Selling: The Hanan Formula for High-Margin Sales at High Levels. Too many remodelers compete on price, which brings down everyone’s margins — and profits, Hanan says.
“The No. 1 way to ensure a margin,” Hanan says, “is by relating it to the value being delivered — not to other people’s prices — and to show that the price that includes the margin delivers a greater value even than a lower price, and therefore is fair.”
He advises remodelers to keep abreast of the averages in their markets for estimated appreciation from specific projects and to compare them to the cost. (See REMODELING’s 2007 Cost vs. Value Report at www.costvsvalue.com.)
The extent to which the financial cost can be perceived as less than dollar-for-dollar is related to the likelihood of moving buyers into that comfort zone of committing, according to Hanan.
The essential consultative selling equation is when the homeowner realizes, “I’m receiving 100% in lifestyle values at 30% to 40% of the cost,” he says.